Lenders shouldn’t be allowed to charge 1,200 per cent interest
Dear Ed... There are lenders in East London who charge 1,200 per cent APR and are allowed to get away with it.
It is about time that we had proper legal controls in this country to stop this, as in most of Europe, the USA and Canada.
It is a sad fact that better-off people in our community pay less for credit, while hard-working families on a low income often have little choice but to go to the legal loan sharks when a crisis hits.
Britain is one of the few industrialised nations that do not have a ‘ceiling’ on the total cost of credit. When the new Financial Conduct Authority regulator gets going next year, it should have the power to impose caps—to protect consumers from the ludicrous charges that lenders are free to make.
I want the total cost of credit capped, rather than just APR. This would make sure that lenders cannot wriggle out by applying high administration fees or repayment charges.
With the pain the country is going through, we need to help low-income households to be more resilient to cycles of debt and poverty.
Earlier this year, over 400 MPs showed some support for these measures—it would be good to have the response of our local representatives on this page too.
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EDITOR: Poplar & Limehouse MP Jim Fitzpatrick was one of those supporting an amendment to the Chancellor’s budget last month to tackle ‘legal loan sharking’ which threatens needy families in debt. The proposed amendment to the Finance Bill sought to make sure the Government’s bank levy includes unsecured lenders to deter high costs which trap families in cycles of debt and compound interest.